Age discrimination prevents older Americans from working longer

Larry Fink suggests saving more and working longer to avoid retirement crisis

by Faruk Imamovic
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Age discrimination prevents older Americans from working longer
© Getty Images/John Moore

America is facing an imminent challenge: the rapidly aging population. Over the next few years, the number of individuals reaching retirement age will reach unprecedented levels. This demographic shift will strain Social Security funds, overwhelm retirement homes, and create significant labor shortages across various industries. Addressing this multifaceted crisis requires innovative solutions and comprehensive strategies.

Larry Fink, the 71-year-old CEO of BlackRock, the world's largest asset management firm, has proposed a two-part solution to this impending retirement crisis. In his annual letter to shareholders, Fink suggested that people should save more money and work longer to mitigate economic catastrophe. “What if the government and the private sector treated 60-plus-year-olds as late-career workers with much to offer rather than people who should retire?” Fink wrote. The current Social Security retirement age is 67, yet most Americans retire earlier. Encouraging people to work into their late 60s and 70s could, according to Fink, soften the blow of the impending crisis.

The reality of working longer

While Fink’s solution seems practical and beneficial on the surface, it overlooks several critical realities. Firstly, many older individuals cannot continue working due to disabilities or caregiving responsibilities for disabled family members. Secondly, those who are willing and able to work often face significant barriers due to age discrimination. Despite legal prohibitions against age discrimination for workers over 40, it remains a common issue in the workplace.

Instead of making it easier for Americans to save for retirement and work as long or as short as they desire, Fink's proposal may inadvertently create a catch-22. The economy needs older Americans to remain in the workforce, but many companies are not willing to employ them.

A 2023 survey by the Society for Human Resource Management found that 30% of workers felt they had faced age discrimination at some point in their careers. Some analysts expressed concern about these findings, especially given the current labor market conditions. The U.S. Chamber of Commerce reports there are 8.5 million open jobs in the U.S., but only 6.5 million unemployed people actively seeking work. Despite this, many companies are hesitant to hire older workers.

Larry Fink
Larry Fink© Getty Images/Michael Cohen
 

Structural barriers to employment

Extensive research on employment discrimination through résumé correspondence field experiments has shown significant findings. These studies use fictional résumés to apply for job openings, tracking the number of callbacks received to gauge employer responses to different age groups.

The research focused on "bridge jobs," such as part-time positions in administration or retail, which many people use to transition into retirement. A total of 40,000 résumés representing different age groups were sent out. The results showed a significant decline in callback rates for older applicants, particularly older women, indicating prevalent age discrimination.

Other studies corroborate these findings. A 2024 survey by ResumeBuilder.com revealed that more than one-third of hiring managers admitted to bias against candidates over 60 and those from Generation Z. This highlights a troubling trend: age bias is not limited to older workers but extends to the youngest job seekers as well.

The corporate bias against older workers

Several high-profile companies have faced legal action for explicit age discrimination. A 2018 investigation by ProPublica and Mother Jones uncovered that IBM had a program to replace workers over 40 with younger employees. The Equal Employment Opportunity Commission found reasonable cause to believe IBM discriminated based on age. Similarly, the pharmaceutical company Lilly was fined $2.4 million in 2023 for a program favoring younger salespeople. Scripps Medical Clinic in San Diego was ordered to pay $6.9 million for mandating retirement at age 70, regardless of the doctors' abilities or interests.

More often, age discrimination is subtle. This kind of evidence is crucial for building discrimination cases, as overt bias is less common but still pervasive.

The desire for a younger workforce stems from various factors. Companies may believe that younger workers are more tech-savvy or healthier, or they may want to present a youthful image to attract customers and potential employees. However, this bias creates significant challenges for older workers who need to remain employed to secure their financial futures.

Fink's assessment acknowledges the unpreparedness of many industrial nations for an aging population. In the U.S., previous generations enjoyed more generous pension and healthcare benefits, but these are insufficient for most retirees today. Fewer than half of Baby Boomers have adequate retirement savings, with one-fifth having no savings at all. As a result, many are forced to work into their 70s, straining to stretch their limited resources.

Fink's proposal to work longer and save more is not feasible without addressing the systemic barriers that prevent people from doing so. The dilemma for executives like Fink is clear: they can either increase wages and extend employment opportunities to ensure workers are better prepared for retirement, or they can advocate for higher taxes to support government-provided retirement benefits. Ignoring the problem will only lead to economic hardships for retirees, ultimately triggering a broader economic crisis.

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